Saudi Aramco & Co

The last week elderly men with painted mustaches covering from head to foot in sheets paid official visit to Russian president.

What is going on here?

Nobody says anything clear. We can hear only some snatches: “cheap oil”, “S-400”, “a number of agreements of mutual interest.”

Between them verbal mixture on “strengthening and structuring relationships”.

As usual.

With whom are they concreting agreement? In the most powerless state on the planet Earth there is only one interesting asset. Really Interesting, so for 50 years everyone has been dancing around it.

Of course we mean “Saudi Aramco” (or SA).

Presumably: – The company brings to the treasury of the Saudis 9/10 state revenues; – produces 10.2 million barrels per day (more than the US as a whole); – has hydrocarbons reserves of 261 billion tons (10 times greater than the largest private oil company in the world – ExxonMobil); – the cost of the entire giant estimates from $ 500 billion to $ 3.5 trillion.

I did not accidentally write “presumably.” SA is a complex asset: a private company of the state-forming family fund.

It is managed interesting way: all the reporting on the state of the company’s affairs are published personally by the members of the Royal Family. Who, how and when making key decisions – the greatest secret.

SA has an eloquent story, revealing a veil to everything that has been happening in the last 80 years in the Middle East.

In the 40s-50s, American oil magnats helped early starters, Saudis, to adjust the entire infrastructure, master the urban areas, including disinfection of water sources and diseases.

The sums with 8-9 zeros were invested in the pursuit of shares in the mega-corporation being built.

The first bell rang in 1973, when the family, in the context of protecting the management, recorded 25% of the key asset.

Complete nationalization took place in the 80s and the US remained, if slightly exaggerated: with “political influence” and “the ability to give advice directly to the head of the Royal Family.”

To date, SA is a state in the state.

On the balance sheet of the largest private-state company are the following: fleet of aircraft, a system of hospitals serving 360,000 people, a collection of football clubs, 4 funds with acquisitions in all countries of the world, 10 development companies, etc.

This monster has been thinking of IPO for 30 years. From the exact moment of nationalization.

If an IPO takes place, it can become the largest in the history. But to do so, Arabs need to open the cards.

After placing only 5% of the share capital of the company will freely apply on the exchanges.

Everything else will remain private.

We must keep in mind that SA is a key member of the Organization of Petroleum Exporting Countries (OPEC). The profit of Aramco and payments to its investors depend on the decision-making process in OPEC, which investors can not explicitly control.

The link with OPEC makes SA subject of the antitrust laws of the United States and the United Kingdom with the risk of criminal prosecution. Saudi company management could declare diplomatic immunity, with most of the responsibility would fall on Western (actually American) management.

In the middle of the year, the London Stock Exchange offered to help Aramco get exemption from the 25% free float requirement set in the listing rules.

And in July, the Office of Financial Regulation and Supervision of Great Britain (FCA) published an amusing document. It proposes to change the rules on which admission to trading on the UK stock market is made.

FCA proposed to create a new category of premium listing for companies controlled by states. Not surprisingly, this happened shortly after a joint delegation of the London Stock Exchange (LSE) and FCA visited Riyadh and presented the London stock market to SA and the Saudi Arabian oil minister.

The decision of the FCA implies the possibility of placing any state assets in London.

In particular, states can own business for historical reasons (for example, as a result of nationalization), and some of their responsibilities or the level of their involvement in the company’s activities can be determined by law.

De facto this:

– whitewashing manipulative schemes, – the withdrawal of the whole sector from the zone of fire of the competing states.

It seems like the company is open, but acts like private.

There is a list of matching criteria.

This list shows that in addition to Aramco, most of the major state-controlled oil and mining companies (Petronas, National Oil Company of Abu Dhabi, PDVSA, CNPC, Kuwait Oil Company, National Iranian Oil Company, SOCAR, AEMFC, Office Cherifien des Phosphates, Codelco, etc.) can meet the criteria, as well as state-controlled conglomerates, for example, Rostek, Rusnano, Alrosa, LKAB and Fortnum.

You see how interesting it became.

The FCA proposal also has this spot: allow state-controlled applicants to conduct a listing through the mechanism of depositary receipts. It may be related to the experience of LSE in admitting large Russian companies through the mechanism of global depositary receipts (GDRs).

Thus, if the rules come into effect, state companies from Russia, China, Africa and the Middle East will be able to get to LSE.

Timeframe?

2018-2019.

SA is preparing for a slaughter.

The NYSE is also involved in negotiations with the Saudis, and now the question is whether they will be able to outdo this generous offer or they do not change laws for trillions as quickly as it is customary in London.

I much prefer a real luncheon meat, like a pressed chicken, or salami, but spam will do if there is nothing else available.

SF policy that spam is unacceptable seems a little draconian. Is it based on concerns over nutrition, eg salt content?

/ducks and runs

FlorianGeyer

Sadly I can remember Spam from my childhood. Fried spam if I remember was rather unpleasant. :)

Jesus

Wall Street and Goldman Sachs stand to make huge commissions if this IPO is offered, it will be the largest IPO.

Solomon Krupacek

the oil price can sink under 30 usd/barrel

Jesus

That is bad news for US frackers and Saudi Aramco.

Solomon Krupacek

and russian budget. be sure, in usa nobody interest the bancrupcy of fracking companies. usa is built up on ral industry, they dont need export row materials.

John Whitehot

bullshit, you’re intellectually corrupted.

the US has gambled on energy exports and for this precise reason it started wars in Ukraine and Syria.

The difference with Russia is that fracking is already very costly in itself and to sell in Europe it becomes even costlier because of the need of transporting the liquefied products on particularly complex tankers.

On the other side, Russia has reserves. the US has debt.

Also you should translate “ral industry” from solomonese into plain english.

Solomon Krupacek

look, the problem is, that you are living in virtual world. in the real world this sentence has no sense: the US has gambled on energy export so, in the usa are private firms, therefore us can not gamble ?P in russia is tate busines, russia gamles. ;) for america is not important to sell own oli (stay more for future, when will be rare and expensive), the economy is supported with huge export of goods AND technologies. russia is not in such situation. in rassia is weak car industry, electronics, chemical industry, pharmaceutical industry, etc.

nonsense. you show you’re living “in virtual world” because even 5th graders know that economy does not work like this.

“this is my last answer under this article to you, bacase you know nothing, only repeatz blablaba”

Of course it is, you’d add only more nonsense.

“papagay”

FO

Justin

US wealth is not from its corporations. How many times must we all say this!

US wealth comes from the ability to print money without risk! Then lend it off to special conglomerates who receive this money from the Fed Reserve at 0% interest! This drives banking and finance etc which then drives industry!

But this only possible due to the “petro dollar”! The metro dollar being the one thing that gives value to the US dollar granting it reserve currency status!

If this status is de-pegged then the US is stuck with 20 trillion in debt and money they can no longer print and money that has now become as worthless as paper! Inflation goes through the roof and a barrel of cash is needed to buy bread!

On top of this is a military they need to maintain, public servants etc etc!

A divided nation split between left and right! 3rd most populous country that needs to be fed! More guns than citizens Mexican drug lord gangs on its borders Blacks wanting some pay back!

Empires crumble because they lose control of the routes, markets and trades of resources!

In today’s modern world the resource of value is oil because today’s world relies on industry to feed us all! To bring us power, water and food! Oil is what develops and drives this industry!

So oil is everything!

The US reserves are costly! Expensive to extract, harder to extract and they have no market to export to because its expensive to ship it and other markets get it cheaper from Russia!

So these markets must be stolen from Russia with Europe made to buy it. Hence the coup in Ukraine to eventually block Russian pipes to Europe (yet failed so far)

With the Qatar’s in 2016, the Saudi’s in 2017 doing deals with Russia and Russian energy industries, this means compromises are being made!

Mark my words, if the US Petro dollar is de-pegged, then u and I and everyone on this site will witness the fall of Rome x 1000!

Russia has been through it (bread lines) All empires have been through it. the ones that die out do so due to over reach and greed! They’ve made too many enemies and started too many wars in which it got stuck in! Its momentum was stopped here in Syria!

The USA and its corps that relies on Foreign labour is now totally fooked!

I believe that either the Euro, Pound or Yuan will be the next reserve currency! This will unite Asia and Europe into one super market leaving the USA to survive on its own!

Watch! This is happening NOW!

Justin

100% agree

Justin

Those companies are now manufacturing in China of which China can nationalise! Its a bit late for the US now!